Deal makes EWC a world-beater

Four years ago, James Packer’s hedge fund invested in a little-known gas and power project developer,
Energy World Corporation
.

On Thursday the company was the stand-out performer on the Australian Securities Exchange. Its shares rose 59 per cent to 54¢ after it signed a deal to sell 25 per cent of its Indonesian assets to Tokyo Gas.

Mr Packer’s hedge fund Ellerston Capital paid $7 million in August 2006 for a 9 per cent stake in EWC at 8¢ a share and currently holds a 8.3 per cent share.

Last year the shares rose as high as 70¢.

The company said the deal covers its three main gas production projects in the Indonesian province of South Sulawesi.

The agreement includes an option for the Japanese utility to buy 500,000 tonnes a year of liquefied natural gas as part of Energy World Corp’s plan to operate a 2 million tonnes a year LNG facility from its Sengkang gas acreage in the province.

Energy World’s chief executive and chairman,
Stewart Elliott
, told The Australian Financial Review that Ellerston had benefited from its early investment in the company.

“They made a lot of money out of their shares because they obviously came in at a few cents with their first [share] placement," said Mr Elliott. He added that Energy World is scheduled to hold talks with Ellerston on Friday in Hong Kong about its shareholding.

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Mr Elliott said the company has purchased construction materials for its LNG facility and hopes to produce first gas in around 18 months. “Demand is such in Indonesia that I think everyone wants to get on and get it done."

He said the real value of the deal with Tokyo Electric lies in collaborating on other projects in the region.

“The 500,000 tonnes a year of LNG quite frankly is nothing for them. It’s really only a token gesture. What is really important to them is the system we have put together and how this can be used throughout the world on smaller gas fields. They look at 50 to 100 years as the future they have to plan for."

In July 2008, Energy World raised $US104 million ($114 million) from five international banks for development of its LNG facility and associated power plant.